Almost anything you need can be only one click away: Transportation, food delivery, valet service, grocery shopping, you name it.
On-demand services are built around a new kind of workers. This very short article explores facts and projections about the future of gig-economy labor.
Labor Market Shift
The U.S. labor market is seeing a clear trend (among others): workers have more choice than ever.
Technological advancement and a bullish economy have allowed for cherry picking of schedules and employers. Major enablers of this trend are gig-economy companies [also referred to as: sharing economy, on-demand economy, 1099 economy].
This has brought a new type of labor force: Diversified Workers (=people with multiple sources of income from a mix of traditional employers and freelance work).
A recent study (07/2015) produced the following estimates:
- Total U.S. civilian labor force: 157 million
- Total U.S. freelance labor force: 53.7 million
- Total diversified workers [part of freelance labor force]: 14.1 million (+8% growth since 2014)
Despite it being one of the major labor force groups, diversified workers still find themselves in a no man’s land – under public law. Legislators and employers are fighting over a suitable legal classification (1099 vs. W2) while the workers themselves remain uncertain about one of their most basic needs: social security.
“We create numerous jobs in every market we’re in. Uber and Airbnb create a massive amount of jobs in different ways. When that happens, policy makers have to pay attention.” – Tri Tran (CEO, Munchery)
Policymakers Are Eager to Learn
2015 as a policy year has centered heavily around labor market topics (minimum wage increases for service jobs are only one example of that).
If Jeb Bush’s and Hillary Clinton’s visits to gig-economy companies across the country are a leading indicator, then we will also see a big focus on labor market topics throughout the presidential campaign 2016 and in the following term.
Policymakers find themselves in a learning phase. They get exposure to different types of on-demand business models and will evaluate pros & cons for further legislative debates.
As part of ongoing labor market development the current and next government will need to secure a regulatory framework that protects diversified workers and allows for a sustainable growth of the gig-economy sector.
Policymakers and the public seem to agree that there is still unclarity in regards to the following areas:
- Insurance planning (health care, general liability, etc.)
- Benefits planning (child care support, 401k contribution, etc.)
The primary impact of this debate will be aimed towards clarifying ‘whose responsibility it will be’ and the ‘extent of it’.
“End of the day, I think we will end up with a third classification” – Sen. Mark Warner (D-Va.)
Expect to see concrete reforms and initiatives in the following areas:
- Classification of ‘new types of labor’
- Potential ‘unionization’ of the new labor type
- Introduction of minimally required obligations/contributions from the employer side (min. benefit, etc.)
Additional Reading & Links:
- [Presentation] Freelancing in America: 2015 (url)
- [Twitter] Sen. Mark Warner (url)
- White House – Worker’s Voice (url)
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